I hate the cloud idea because it requires doing everything through the browser and having an active internet connection. I refuse to read inside a web browser, and I'm often outside of internet reach. If Amazon sends the whole file directly to my Kindle so I can read it when and where I please, internet connection or not, then I'd consider renting. But to read something off the cloud? Absolutely not.

It could be both.
For movies , there are download/rent options (ITunes) and streaming options (Netflix). Both do quite well.
People who have tested out the Kindle Cloud Reader (as I have) agree that the user experience is acceptable , if not as good as the native app. It also is capable of offline reading , via storage in the browser cache. As the app matures, and as the broadband infrastructure gets built out, the user experience can only get better. Even now, though, plenty of people watch Netflix movies on home wifi and like it. And lots of people have 3G capable reading devices with mostly constant Internet connections.